1099 Contractor in South Dakota with a Colorado Client: Where Do You File?
Answer
South Dakota taxes nothing, and Colorado taxes you only if you work there. Living in South Dakota means no resident return at all. A Colorado client does not create a Colorado filing obligation by itself — physically performing services inside Colorado does, and then only for that portion.
Last verified
The most common contractor worry — that invoicing an out-of-state client creates a filing obligation there — is usually unfounded. What creates the obligation is physical presence, and South Dakota residents have no home-state return in any case.
Colorado publishes no de minimis day count or dollar floor for nonresidents. Any Colorado-source wage income above the state's general filing threshold requires a nonresident return, and that threshold is reset each year — check the current figure on the Colorado Department of Revenue — Taxation Division nonresident instructions before filing.
What you file
- 1Nonresident return · ColoradoForm DR 0104 with Schedule DR 0104PN
File a Colorado nonresident return only for income from services you physically performed in Colorado. South Dakota does not tax wage or self-employment income.
The two states, side by side
| South Dakota | Colorado | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form DR 0104 with Schedule DR 0104PN |
| Credit for other-state tax | No income tax | Form DR 0104CR |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | South Dakota Department of Revenue | Colorado Department of Revenue — Taxation Division |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Colorado and working in South Dakota gives:Home state only — estimated payments.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: South Dakota → ColoradoWork state only
- Remote worker: South Dakota → ColoradoNo state income tax on your wages
- Moved mid-year: South Dakota → ColoradoOne part-year return — the state you moved to
Other South Dakota pairs
Questions people actually ask
I live in South Dakota and my client is in Colorado. Do I have to file a Colorado tax return?
South Dakota taxes nothing, and Colorado taxes you only if you work there. Living in South Dakota means no resident return at all. A Colorado client does not create a Colorado filing obligation by itself — physically performing services inside Colorado does, and then only for that portion.
Do reciprocity agreements help a 1099 contractor?
No. Every state reciprocity agreement in the country is an arrangement about wage withholding between two revenue departments, and a 1099 has no withholding to switch off. Whether South Dakota and Colorado hold an agreement makes no difference to a self-employed filer — sourcing rules decide the answer instead.
How current is this?
The South Dakota and Colorado rules on this page were last checked against South Dakota Department of Revenue and Colorado Department of Revenue — Taxation Division on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- South Dakota Department of Revenue — individual income taxaccessed 2026-08-07
- Colorado Department of Revenue — Taxation Division — individual income taxaccessed 2026-08-07